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Older condos have the advantage of being less expensive and more accessible to different types of property seekers. However, there are other advantages that buyers and investors will enjoy when buying older condos. If you are planning on buying older condos and have many questions, this article can help you decide.
Q: What is a condominium?
According to RA 4726, a condominium is an “interest in a real property consisting of a separate interest in a unit in a residential, industrial, or commercial building and an undivided interest in common, directly or indirectly, in the land in which it is located and in other common areas of the building.”
To put simply, a condominium is a building that can be owned per section by individuals or corporations. This can be used for residential, industrial, or commercial purposes.
Q: Who can own condos?
Based on the Condominium Act of the Philippines, Filipino citizens and corporations can own condominiums. Foreigners on the other hand are restricted to owning no more than 40 percent of a corporation’s total outstanding capital stock, which must be owned and managed by a Filipino. Note also that foreigners and foreign corporations are legally prohibited from owning land in the Philippines (read more on RA 7652 or Land Ownership for Foreigners in the Philippines).
Q: Who can own condominium units?
According to RA 472, Filipino citizens and corporations can own condominium units. By virtue of the Condominium Act, foreigners are allowed to purchase and acquire condo units.
Q: Is it okay to buy an old condo?
A: Buying older condos could bring more advantages than disadvantages. Some older condominium buildings may have signs of wear and tear. But if you plan to rent it out, many tenants will still be eager to rent the space. Among the factors these tenants consider are location and lower rental prices compared to newly built condos.
Better rentability refers to how quickly and easily tenants rent a unit, not necessarily higher rental income.
Who would want to avoid renting an old condo near a university, a central business district, or a train station? Many property seekers will be willing to rent an old condo in a prime location (see more condos for rent in Metro Manila).
If you are thinking about the lifespan of the condo building and your ownership, you don’t have to worry. The concept of condo perpetual ownership in the Philippines safeguards condo owners.
Q: What is the lifespan of a condo building?
A: Although the management company doesn’t have a set lifespan, your condominium does. In the Philippines, all condominium buildings, no matter how big or small, have a 50-year lifespan. Condominiums can last longer than 50 years when well-maintained.
Q: What happens to condos in the Philippines after 50 years? Will a condominium be demolished after 50 years?
A: Your condominium ownership doesn’t necessarily end after 50 years because the corporation can apply for renewal for another 50 years. If you choose perpetual ownership, the condo unit will be yours for life without a specified end date. A perpetually owned condo can be occupied as long as the buyer wants. Due to perpetual ownership, the property will transfer to the homebuyers’ rightful successors once they pass away.
One of the most frequent issues brought up by condo buyers is this one. And given that a lot of money is involved when buying a condo, it is a very reasonable issue to ask.
The Condominium Act of the Philippines safeguards unit owners’ interests in a condominium project.
More About the Condominium Act of the Philippines
Section 8 of the Condominium Act states that multiple people owning condos in a condominium project may file a legal action. The legal action’s purpose is to divide the project by selling it.
To divide the project, condo owners will act as co-owners of the entire building. The condo owners will have the same proportion as their interests in the common areas. However, a partition will only be granted upon proof of the following:
- The project has yet to be significantly rebuilt or repaired. The state before its damage or destruction three years after the damage or destruction renders parts of it unusable;
- that the project has been damaged or destroyed to the point where at least half of the units are no longer livable;
- that condominium owners who collectively control more than 30% of the interest in the common spaces are opposed to the project being repaired or restored;
- the project has been in place for more than fifty years, it is outdated and unprofitable;
- that the condominium owners who collectively own more than fifty percent of the common areas are opposed to its repair, restoration, remodeling, or modernization; or
- the project, or a significant portion of it, has been condemned or expropriated, rendering the project infeasible;
- that the condominium owners who collectively own more than 70% of the interest in the common areas oppose maintaining the condominium; or
- that the declaration of restrictions, duly registered in line with the rules, has the requirements for such a partition by sale.
Q: Is it good to buy a condo as an investment in the Philippines?
A: An older condo unit’s value is among the most crucial factors. You can save money by purchasing a less expensive unit in an older building. However, consider that investing in an old condo requires upgrades or improvements. Older condos naturally have larger cuts per unit. This makes them more valuable than newly built modern units with the same price range.
Old condo properties also have a demonstrated resale value. This is because any transaction between a willing buyer and a willing seller will likely satisfy both parties’ requirements.
An older condo building is also prime for value appreciation, which can accelerate your financial success. Compared to a new condo unit, an interior makeover can increase an older home’s property value, rentability, and investment return. You can renovate an older condo unit to make it good as new but with better future growth potential.
You can also have more leeway to make changes when buying older condos. Modern condo developments include furnishings, fittings, and finishes. An old condo is preferable for individuals who wish to have a custom interior.
Q: What is the disadvantage of buying older condos?
A: Although there is better rentability if the old condo is in a strategic location, rental returns still tend to be lower than units in newly built condos. That’s something worth considering.
Buying a unit in a brand-new building makes more sense if you want a higher and quicker investment return. However, investing in an older condominium building is worth considering if the property’s floor area and location are unmatched.
Keep an open mind and remember that just because a property was built years ago doesn’t necessarily mean it’s at a dead end. A used condo unit can be transformed in various ways to make it appear brand new. To find a suitable old condo for you, browse through Lamudi’s listings and send an inquiry.
For more real estate tips and advice, check out our previous journals here. You can also check out available condos for sale in Lamudi.
